Africa-Press – Zimbabwe. Africa’s push to expand clean energy generation is being slowed by financing systems that fail to meet the needs of mid-sized renewable projects, investors and developers have warned.
The experts revealed this during a panel discussion during the Africa Investment Forum Market Days 2025 being held in Rabat, Morocco, where they argued that current lending frameworks are built around large-scale infrastructure, leaving smaller renewable ventures unable to progress.
Several investors said development finance institutions continue to impose big-project requirements on relatively modest initiatives—resulting in delays that restrict electricity access across the continent.
Speakers noted that inflexible lending conditions are driving up costs, extending timelines, and causing many viable projects to stall or collapse.
This, they said, is undermining the continent’s wider energy transition.
“You cannot apply the same conditions for a 1 000-megawatt (MW) project to a 30 or 40MW project. The procedures drag on, the costs soar, and at the end of the day, the country suffers,” ACWA Power Middle East, Africa, and South Asia president Hashim Ghabashi said.
“There is this project where lender advisory fees alone accounted for nearly 40% of the total cost, demonstrating how rigid rules can undermine project viability.”
ACWA Power is a Saudi Arabia based developer, investor and operator of power generation and desalinated water plants with 110 assets in operation, construction or advanced development across 15 countries.
Participants emphasised the need for greater alignment between regulation, financing, and execution to unlock Africa’s energy potential.
Standardised power purchase agreements (PPAs), stronger credit enhancement mechanisms, and deeper regional integration, they said, could expand market size and lower perceived investment risks.
Tom Longmuir, a partner at Ashurst LLP, said even the most well-prepared project cannot succeed if the off-taker is unable to meet payment obligations. Partial risk guarantees and multilateral backing, he noted, remain essential to mobilising private investment.
Market analysts also highlighted the importance of involving local banks and increasing local-currency financing to broaden investor participation.
“There’s an automatic tendency to rely on hard currency loans, but many governments lack the reserves to support these payments. To scale projects sustainably, we need a balance between hard and local currency financing, and we must involve local banks and developers,” one expert said.
“Without their participation, we risk limiting ourselves to demonstration projects rather than building a truly sustainable energy sector.”
She added that Africa accounts for only 2% of global green investment despite its vast renewable resources and strong growth prospects.
They agreed that breaking down the current barriers—through standardised regulation, regional integration, effective de-risking instruments, and greater local financial involvement—could position Africa as a major player in the global energy transition.
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